ZKasino users fuming as $33M in promised refunds are instead sent to Lido

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On-chain data shows ZKasino moved $33 million worth of users’ bridged ETH to Lido, while users claim it rescinded a plan to return their crypto.

ZKasino users fuming as $33M in promised refunds are instead sent to Lido

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Blockchain-based gambling project ZKasino is being slammed on X for moving $33 million worth of investor and user funds to staking protocol Lido — a sudden change from its original plan to return the funds.

In an April 20 blog post, ZKasino announced its network had gone live. More than 10,000 users who had bridged a collective 10,515 Ether (ETH) to the network in a bid to collect more of its ZKasino (ZKAS) token were expecting they could get their ETH back as originally promised.

Instead, ZKasino’s post said it “made changes from our initial plan” and all bridged ETH was converted to ZKAS at a “discounted rate of $0.055” on a 15-month vesting schedule.

It claimed the changes were “done as a favour” so it could “provide a seamless transition” as its chain doesn’t use ETH. Users also noticed it had changed the wording on its website, removing a statement that said the ETH “would be returned.”

These concerns were further intensified after an on-chain transfer showing ZKasino moved all of its users’ 10,515 ETH into the staking protocol Lido.

Source: Ember

Meanwhile, an anonymous crypto developer known as “cygaar” claims that the blockchain ZKasino released was “an Arbitrum Nitro chain that took 2 minutes to deploy” and didn’t use zero knowledge technology or EigenDA despite its claim that it would.

Source: cygaar

On X, hundreds of posts from apparent ZKasino users who pitched money toward the project are now alleging the project is an exit scam.

Some have even spread the personal information and address of ZKasino’s founder known on X as “Derivatives Monke,” using it to call for legal action.

More controversy

Venture capital firm Big Brain has added to the controversy as well, claiming in an April 21 X post that ZKasino “appears to be fraudulent” and it “never invested in ZKasino” but was offered a pro-rata token distribution that it had not received and “will not opt to receive.”

This came after ZKasino claimed in an X post last month to have closed a Series A investment round at a $350 million valuation with backing from crypto exchange MEXC and venture firm Big Brain Holdings, among others.

Source: Big Brain Holdings

Meanwhile, crypto outlet TechFlow reported on April 21 that MEXC said (translated) it was “just one of the investors” and ZKasino’s “behavior has nothing to do with us. As an investor, we are also victims.”

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ZKasino, its founder, its parent firm ZigZag Labs and MEXC did not immediately respond to requests for comment.

ZKasino has been largely mute on X through the backlash. The project posted a humdrum update about integrating EIP-3074 on X.

Derivatives Monke has replied to an X user who criticized Monke over ZKasino’s recent decision and in another post, shared his project’s latest X post with the caption “keep building.”

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